For some months now, interest rates across all types of loans have been falling. Whether a borrower is looking for a new home owner loan or mortgage, a secured loan or an unsecured loan, interest rates on loans in general are now significantly cheaper than they were even a few months ago.
Within the home owner loan market, rates have fallen dramatically over the course of the past few months, largely due to the effects of the Government’s Funding for Lending scheme filtering through the system to eventually reach borrowers with the benefits of cheap loan deals being passed on from banks and building societies.
The National Mortgage Index from the Mortgage Advice Bureau, has seen a large swing of borrowers moving towards fixed term loan deals when they are looking for a new home owner loan product, with around 92 per cent of all purchase loans and 93 per cent of re mortgage loans being taken out on a fixed rate deal.
As lenders continue to battle to be able to offer the best interest rate on a fixed rate loan deal, rates have continued to fall and the Mortgage Advice Bureau has predicted that the average rate on a fixed rate loan for two and five years is likely to fall below 4 per cent by the end of April this year.
At the same time as cheap loan rates, the Mortgage Index also showed that the average loan to value on home owner loans had also reached its highest point since October 2011, at 59.2 per cent.
Brian Murphy of the Mortgage Advice Bureau said “Generous helpings of Government funding mean lenders are showing more appetite for risk. The best deals are at low loan to values, but as that space becomes increasingly crowded, lenders are open to offering better rates in return for less up front investment.”